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Saturday, June 25, 2016

Wadias and AmbaniThere
are several stories on how the war between the two started. Some say
that it was a fight between old money and new money. Nusli Wadia had a
business pedigree where as Dhirubhai, who started out as a petrol
station attendant, had an amazing rags-to-riches story.His
vaulting ambition, his appetite for risk and larger-than-life image made
him a natural target for those who resented his meteoric rise to the
top of the business ladder.During the Janata Party rule (1977-
1979), Nusli Wadia obtained the permission to build a 60000 tpa
di-methyl terephtalate (DMT) plant.However, before his letter of
intent could be converted into a license, the government changed and
when the Congress government came to power, his license was delayed
(until 1981) with one pretext or the other.This was the same time
when Dhirubhai obtained license to build a PTA plant. Dhirubhai was
also contemplating on building a Paraxylene facility.All this
infuriated Wadia and it marked the beginning of the Ambani-Wadia battle
where Ramnath Goenka, then Indian Express proprietor, joined forces with
Wadia.

Shaw Wallace and UB GroupIn
the early 1980s, Vijay Mallya joined hands with Manu Chhabria to bid
for Shaw Wallace. However, due to tight currency regulations at the
time, Mallya didn’t come out in open about partnering Chhabria, a
non-resident Indian.Chhabria took over Shaw Wallace, shrugged off
Mallya's claim for the company and triggered one of India's most
enduring corporate rivalries between Shaw Wallace and the UB Group.In
2005, UB Group signed a deal with Jumbo World Holdings Limited in Dubai
to acquire Shaw Wallace for Rs 1,300 crore (Rs 13 billion).Around the time Mallya acquired Shaw Wallace, Manu Chhabria was already dead. Mallya dealt with his wife Vidya Chhabria.

Wadia and Rajan PillaiAs
soon as the battle with Reliance had cooled off in the late 1980s,
Nusli Wadia launched an all-out attack to acquire Britannia Industries.
An American company named Nabisco Brands Inc owned Britannia then.Wadia’s friend Rajan Pillai was managing Britannia in all over Asia. He was called the 'Biscuit King'.Through
Pillai, Wadia approached Nabisco’s management and expressed interest in
acquiring Britannia but the offer was turned down.On the contrary, Nabisco made Pillai chairman of Britannia. Soon after, the two friends turned into bitter rivals.Pillai
partnered French food company Danone to expand the business but the
latter broke the partnership and joined hands with Wadia. Danone accused
Pillai of fraud.After a long boardroom battle, Pillai ceded control to Wadia. and later Pillai died in prison.

Mukesh Ambani and Anil AmbaniMukesh
Ambani and Anil Ambani split their businesses between them after their
father Dhirubhai Ambani died. There was lot of friction between the two
since the split but it acquired new heights when the two brothers
reached court over a dispute.Mukesh Ambani's Reliance Industries
Limited agreed to sell Anil Ambani's Reliance Natural Resources Limited
80 mmscmd of gas from the Krishna-Godavari Basin for 17 years at $2.34
per mmbtu - for its Dadri power plant.With RIL stopped supplying
the gas, RNRL went to court against RIL for not implementing this part
of a family MoU signed when the empire was being carved up between the
two brothers.The Supreme Court delivered a judgement which experts said was in favour of Mukesh Ambani.Few
months after the court case, the two brother announced that they have
scrapped all existing non-compete agreements, allowing either group to
enter sectors that had earlier been reserved for one of them.In
2013, Ambani brothers joined hands for a telecom deal. Valued at Rs
1,200-crore, the deal lets Mukesh Ambani use his younger sibling's optic
fibre network for launch of his telecom venture.L&T and RILL&T’s
tryst with the Ambanis started after Manu Chhabria, a takeover-tycoon,
started making attempts to acquire L&T in 1987.No one person or institution was majority stakeholders in L&T, which made the company a sitting duck for acquisition.While
Chhabria was acquiring shares of L&T, Dhirubhai Ambani too started
buying the construction firm’s stocks. Then L&T Chairman NM Desai
opted to join hands with Ambani, a fellow Gujarati, to prevent L&T
falling in hands of Chhabria.The first battle was fought between Ambani and Chhabria. The latter lost due to Ambani’s political clout.Dhirubhai
Ambani soon came on the board of L&T and became the chairman.
L&T was a blue-chip and had easier access to cash. The engineering
giant was just what the Ambanis needed to set up their cracker project
without putting up the necessary funds.Soon after assuming control, Ambani forced L&T to grant supplier's credit of Rs 570 crore to reliance for its project.Ambani’s
game, however, could not last long. They were forced to abort their
plans after their arch-rival VP Singh came to power in Delhi in 1989.
The management control was restored back to the institutions.

McDonalds and Burger KingTheir
rivalry is famous as Burger Wars. That’s because both the companies
have been hitting out each other through their advertisements and
marketing campaign.One famous advertisement is of Burger King attacking McDonald’s on the size of its hamburgers.In
October, McDonalds announced it would stop serving Heinz ketchup in its
stores. Why? Because Bernardo Hees, former chief executive of Burger
King became chief executive of Heinz.Tesco and Sainsbury’sTesco and Sainsbury’s are the two biggest retailers in the UK. Their battle is termed as Trolley Wars.
Sainsbury’s
was started in 1869 and constantly grew to be the largest retailer in
UK until 1995. Tesco, which was founded in 1919, overtook Sainsbury’s as
the top UK retailer.
The two companies have been fighting it out in their advertisement and even while acquiring companies.

Apple and MicrosoftYou can say that the original rivalry betwen Microsoft and Apple started with a court case.
Apple
had agreed to license certain parts of its GUI to Microsoft for use in
Windows 1.0, but when Microsoft made changes in Windows 2.0 adding
overlapping windows and other features found in the Macintosh GUI, Apple
filed suit, according to Wikipedia.Apple added additional claims to the suit when Microsoft released Windows 3.0.The court’s decision was largely in favour of Microsoft.Since
then, the two companies have been talking negative about each other’s
products. For example, Apple CEO Tim Cook to analyst during the
company’s earning call: "I haven't personally played with the Surface
yet… but what we're reading about it that it's a fairly compromised,
confusing product." On the other hand, Microsoft Surface tablet’s advertisement shows things iPad cannot do and makes fun of Siri.Adidas and PumaAdidas
was founded in 1948 in Germany by Adolf Dassler, after splitting from
his elder brother Rudolf - who later established Puma.The brothers’ relationship went sour during the World War II. After the war was over they went their separate ways.Puma
and Adidas entered a fierce and bitter rivalry after the split. The
town of Herzogenaurach (where they lived) was divided on the issue,
leading to the nickname "the town of bent necks". That’s because people
looked down to see which shoes strangers wore before talking to them,
according to Wikipedia.In 2009 employees of both the companies
played a friendly soccer match symbolising end of the 60-year-old feud.
However, both the Dassler brothers had passed away by this time.

Airbus and BoeingIn the large jet airliner business, it’s only two companies that rule the roost - Airbus and Boeing.
Though
the companies have been competing for a long time, the battle got
intense when global airspace industry got consolidated after both the
companies went on merger and acquisition spree in the 1990s.
The
two are engaged in neck and neck completion. From 2003 - 2012, Airbus
has received 7,714 orders and delivered 4,503, and Boeing has received
7,312 orders and delivered 4,091, according to Wikipedia.Both the companies regularly accuses the other of receiving unfair state aid from their respective governments.In
fact, in May 2005 the United States filed a case with World Trade
Organisation against the European Union for providing allegedly illegal
subsidies to Airbus. Twenty-four hours later the European Union filed a
complaint against the United States protesting support for Boeing.

Sky and BTSky
and BT have been battling each other in the broadband market for a long
time. But the rivalry reached new heights after BT started bidding for
Premier League football licenses.To take away Sky's loyal
football fans, BT launched a huge marketing campaign using a range of
celeb presenters. BT's move into Premier League football has sent
license fees rocketing, which has dented Sky's profits.

Procter & Gamble and UnileverFMCG
companies Unilever and Procter & Gamble (P&G) dominate the
global consumer goods market. The rivalry between the two got intense
after the Anglo-Dutch company Unilever entered the US market.The
competition between the two is so intense that P&G had hired
espionage agents to spy on Unilever and get information on the hair care
business. The agents were caught and P&G paid Unilever $10 million.At one point, P&G had confessed looking through Unilever’s trash for information on its products and strategy.Unilever has brands such as Dove, Axe, Vaseline, Lux, Ponds, and Sunsilk.P&G is equipped with brands such as Head & Shoulder, Olay, Pantene, Gillette, Oral-B, and Ariel.Apple and SamsungApple
gave the world its first true touch screen smartphone. It pioneered the
concept and turned the innovation into booming profit. Then came along a
powerful Asian manufacturer Samsung electronics.
Using Google’s
Android software it created smartphones and tablets that were similar to
Apple products. It slowly started gaining market share, hurting Apple’s
margins.In turn, Apple launched patent infringement suits and
got the verdict partially in its favour. The Korean rival, however,
flooded the market with products that rivalled Apple’s and were cheaper.Last quarter, Samsung managed to sell almost three times as many smartphones as rival Apple, according to Gartner.

Energiser and DuracellDuracell
was the first ever company to introduce an alkaline battery into the
market but in 1959 the Energiser battery was introduced by Eveready.
Competitive products started the rivalry that has lasted over 50 years
now.In 1970, Duracell created an ad campaign featuring the
Duracell bunny - the Energiser bunny followed very quickly, and much to
Duracell's annoyance, became the more memorable mascot.

Coke and PepsiIt
will be apt to call the rivalry between Coke and Pepsi as a war. In
fact, their advertising campaign targeting each other is called Cola
Wars.Pepsi adverts often focus on celebrities choosing Pepsi over
Coca-Cola, supporting Pepsi's positioning as the soft drink for the new
generation.Since 1975, Pepsi started showing people in blind
taste tests called the Pepsi Challenge. In this campaign. consumers are
blindfolded and asked to choose the Cola they like from different
available and most of them choose Pepsi.The war even went to space. In 1985, Coca-Cola and Pepsi were launched into space aboard the Space Shuttle Challenger.The
companies had designed special cans to test packaging and dispensing
techniques for use in zero G conditions. However, none of their units
worked as expected, according to Wikipedia.

Saturday, June 11, 2016

While it may be true that in the stock market
there is no rule without an exception, there are some principles that are tough
to dispute. Let's review 10 general principles to help investors get a better
grasp of how to approach the market from a long-term view. Every point embodies
some fundamental concept every investor should know.

1. Sell the Losers and Let the Winners Ride!

Time and time again, investors take profits
by selling their appreciated investments, but they hold onto stocks that have
declined in the hope of a rebound. If an investor doesn't know when it's time
to let go of hopeless stocks, he or she can, in the worst-case scenario, see
the stock sink to the point where it is almost worthless. Of course, the idea
of holding onto high-quality investments while selling the poor ones is great
in theory, but hard to put into practice. The following information might help:

Riding a Winner - Peter Lynch was famous for talking about
"tenbaggers", or investments that increased tenfold in value.
The theory is that much of his overall success was due to a small number
of stocks in his portfolio that returned big. If you have a personal
policy to sell after a stock has increased by a certain multiple - say
three, for instance - you may never fully ride out a winner. No one in the
history of investing with a "sell-after-I-have-tripled-my-money"
mentality has ever had a tenbagger. Don't underestimate a stock that is
performing well by sticking to some rigid personal rule - if you don't
have a good understanding of the potential of your investments, your
personal rules may end up being arbitrary and too limiting.

Selling a Loser - There is no guarantee that a stock will bounce
back after a protracted decline. While it's important not to underestimate
good stocks, it's equally important to be realistic about investments that
are performing badly. Recognizing your losers is hard because it's also an
acknowledgment of your mistake. But it's important to be honest when you
realize that a stock is not performing as well as you expected it to.
Don't be afraid to swallow your pride and move on before your losses
become even greater.

In both cases, the point is to judge
companies on their merits according to your research. In each situation, you
still have to decide whether a price justifies future potential. Just remember
not to let your fears limit your returns or inflate your losses

2. Don't Chase a "Hot Tip."

Whether the tip comes from your brother, your
cousin, your neighbor or even your broker, you shouldn't accept it as law. When
you make an investment, it's important you know the reasons for doing so; do
your own research and analysis of any company before you even consider
investing your hard-earned money. Relying on a tidbit of information from
someone else is not only an attempt at taking the easy way out, it's also a
type of gambling. Sure, with some luck, tips sometimes pan out. But they will
never make you an informed investor, which is what you need to be to be
successful in the long run.

3. Don't Sweat the Small Stuff.

As a long-term investor, you shouldn't panic
when your investments experience short-term movements. When tracking the
activities of your investments, you should look at the big picture. Remember to
be confident in the quality of your investments rather than nervous about the
inevitable volatility of the short term. Also, don't overemphasize the few
cents difference you might save from using a limit versus market order.Granted, active traders will use these
day-to-day and even minute-to-minute fluctuations as a way to make gains. But
the gains of a long-term investor come from a completely different market
movement - the one that occurs over many years - so keep your focus on
developing your overall investment philosophy by educating yourself.

4. Don't Overemphasize the P/E Ratio.

Investors often place too much importance on
the price-earnings ratio (P/E ratio). Because it is one key tool among many,
using only this ratio to make buy or sell decisions is dangerous and
ill-advised. The P/E ratio must be interpreted within a context, and it should
be used in conjunction with other analytical processes. So, a low P/E ratio
doesn't necessarily mean a security is undervalued, nor does a high P/E ratio
necessarily mean a company is overvalued.

5. Resist the Lure of Penny Stocks.

A common misconception is that there is less
to lose in buying a low-priced stock. But whether you buy a $5 stock that
plunges to $0 or a $75 stock that does the same, either way you've lost 100% of
your initial investment. A lousy $5 company has just as much downside risk as a
lousy $75 company. In fact, a penny stock is probably riskier than a company
with a higher share price, which would have more regulations placed on it.

6. Pick a Strategy and Stick With It.

Different people use different methods to
pick stocks and fulfill investing goals. There are many ways to be successful
and no one strategy is inherently better than any other. However, once you find
your style, stick with it. An investor who flounders between different
stock-picking strategies will probably experience the worst, rather than the
best, of each. Constantly switching strategies effectively makes you a market
timer, and this is definitely territory most investors should avoid. Take Warren
Buffett's actions during the dotcom boom of the late '90s as an example.
Buffett's value-oriented strategy had worked for him for decades, and - despite
criticism from the media - it prevented him from getting sucked into tech
startups that had no earnings and eventually crashed.

7. Focus on the Future.

The tough part about investing is that we are
trying to make informed decisions based on things that have yet to happen. It's
important to keep in mind that even though we use past data as an indication of
things to come, it's what happens in the future that matters most.A quote from Peter Lynch's book "One Up
on Wall Street" (1990) about his experience with Subaru demonstrates this:
"If I'd bothered to ask myself, 'How can this stock go any higher?' I
would have never bought Subaru after it already went up twentyfold. But I
checked the fundamentals, realized that Subaru was still cheap, bought the
stock, and made sevenfold after that." The point is to base a decision on
future potential rather than on what has already happened in the past.

8. Adopt a Long-Term Perspective.

Large short-term profits can often entice
those who are new to the market. But adopting a long-term horizon and
dismissing the "get in, get out and make a killing" mentality is a
must for any investor. This doesn't mean that it's impossible to make money by
actively trading in the short term. But, as we already mentioned, investing and
trading are very different ways of making gains from the market. Trading
involves very different risks that buy-and-hold investors don't experience. As
such, active trading requires certain specialized skills.Neither investing style is necessarily better
than the other - both have their pros and cons. But active trading can be wrong
for someone without the appropriate time, financial resources, education and
desire.

9. Be Open-Minded.

Many great companies are household names, but
many good investments are not household names. Thousands of smaller companies
have the potential to turn into the large blue chips of tomorrow. In fact,
historically, small-caps have had greater returns than large-caps; over the
decades from 1926-2001, small-cap stocks in the U.S. returned an average of
12.27% while the Standard & Poor's 500 Index (S&P 500) returned 10.53%.This is not to suggest that you should devote
your entire portfolio to small-cap stocks. Rather, understand that there are
many great companies beyond those in the Index, and that by neglecting all
these lesser-known companies, you could also be neglecting some of the biggest
gains.

10. Be Concerned About Taxes, but Don't
Worry.

Putting taxes above all else is a dangerous
strategy, as it can often cause investors to make poor, misguided decisions.
Yes, tax implications are important, but they are a secondary concern. The
primary goals in investing are to grow and secure your money. You should always
attempt to minimize the amount of tax you pay and maximize your after-tax
return, but the situations are rare where you'll want to put tax considerations
above all else when making an investment decision .

The Bottom Line

There are exceptions to every rule, but we
hope that these solid tips for long-term investors and the common-sense
principles we've discussed benefit you overall and provide some insight into
how you should think about investing.